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Payer/Provider Relations - Atlantic Information Services
Payer/Provider Relations - Atlantic Information Services
Jill Brown is the managing editor of Managed Care Week, the industry's leading newsletter on the managed care industry. Published by Atlantic Information Services, Inc., it contains timely news and data on HMOs, PPOs, POS plans, new managed care products and markets, and government initiatives that are changing the face of managed care.

Jill has also served as the editor of News and Strategies for Managed Medicare and Medicaid, Inside PPMCs and Physician Partnership Report, also published by Atlantic Information Services. Prior to joining AIS, Jill was a health care consultant with Arthur Andersen LLC's New England Healthcare Consulting practice, where she worked on a variety of projects focusing on physician staffing ratios, health care operations redesign, IS implementations and Y2K compliance. Jill also worked as a provider relations representative for a mid-Atlantic HMO.

Jill earned a Master of Health Sciences in Health Finance and Management from Johns Hopkins University School of Hygiene and Public Health, and a Bachelor of Arts from Johns Hopkins University.

Question 1 - Hello Jill and welcome.

UnitedHealth Group made headlines last fall by promising to "end" utilization management. Aetna U.S. Healthcare has more recently announced changes to physician contracts in a few key states. Do you think those changes were substantive? Do you think other health plans will follow their lead in lessening provider restrictions? by HBInterview on September 25, 2000

Answer 1 - For many physicians, UnitedHealth Group's changes were more public relations than revolution. The health plan announced that it would eliminate the majority of its pre-approval requirements after realizing it only denied 2% of requests. With that decision, UnitedHealth became the envy of the industry, earning accolades from physicians, consumer groups
and legislators. But while it still sees an enrollment
"bounce" from the policy change, physicians' enthusiasm has lessened.

Some physicians were disappointed to learn that the
authorization hurdle would simply be replaced with clinical profiling. Although physicians no longer have to request approval for treatments, they still must notify UnitedHealth of their treatment plans. It may not be as infuriating for some providers, but it's still a time-consuming requirement.

And while the health plan won't say "no" up front, it uses
the data to counsel physicians who exhibit practice patterns outside the norm -- with the threat of ultimately removing some outliers from its network.

To date, other health plans haven't followed UnitedHealth's lead wholeheartedly. Aetna has also been working to improve its relationships with physicians on a state-by-state basis. It began in its home state of Connecticut, eliminating a few referral requirements for lab tests and other services.

And PacifiCare is piloting a "gold card" program that would allow physicians with a history of following care management guidelines to opt out of authorization requirements for certain procedures. But those approaches are much more piecemeal than UnitedHealth's. by Jill Brown on September 25, 2000
Question 2 - What payer improvements have you seen over the last year to enhance the relationship with Hospitals and Physicians? by HBInterview on September 25, 2000

Answer 2 - The most sweeping change has been newly launched e-commerce strategies that streamline communications between payors and providers. Encouraged by HIPAA regulations governing electronic claims submission, security and privacy guidelines, health plans are Web-enabling their consumer and provider relations structures.

A number of health plans around the country are making it
possible for provider groups to not only submit and track
claims electronically, but also send in referrals, request
authorizations and check member eligibility and benefits.
All these innovations hold the promise of easing
administrative hassles for the provider, easing up
requirements on physicians' time and lowering overhead.

But in the short term, it's an open question whether the
initiatives accomplish those goals. Clearly, Web-enabling
provider relations can reduce expenses for the health plan, but whether they'll make life easier for the provider is dependent on how the system was designed - with only the payor's requirements in mind, or emphasizing providers' needs as well. by Jill Brown on September 25, 2000
Question 3 - Throughout the news, there have been articles communicating the struggle of many managed care organizations. How has this turbulent environment affected the provider relations? by HBInterview on September 25, 2000

Answer 3 - There's no question that health plans have had it rough over the past year, and their misfortune has translated into both good and bad news for contracting physicians and hospitals.

Among their challenges:
They've faced unprecedented lawsuits over the mechanisms
they use to contain costs;
They're under fire for a second year of double-digit
premium increases;
Employers and workers have demanded fewer restrictions
and broader access to services;
They face the threat of federal patient protection
legislation that could increase their liability, while many states have passed managed care reforms that expand
regulatory authority and add other rights;
Election-year politics have emphasized the need for
federal reform; and
Managed care backlash has made them "public enemy number

How does this affect provider relations?

CONTRACTING: As products with fewer restrictions and
broader networks grow more popular, health plans are under
greater pressure to contract with as many providers as
possible. Health plans can no longer take their entire book of business from one hospital to its competitor down the street if contract negotiations break down, since employers demand wide provider networks.

In addition, some states are putting more power in
the hands of providers. Kentucky, Virginia and Maryland
have passed bans on all-product clauses that force
physicians to participate in every product offered by a
health plan. Others have cracked down on prompt payment
laws, with a few like Georgia making headlines by issuing
fines to non-compliant plans.

REIMBURSEMENT: Although health plans are negotiating
payment increases unseen for the last decade, with premium
hikes in the double-digits, rarely are those raises passed
onto contracting providers. Insurers say they need them to
improve underwriting after a few years of competing by
offering artificially low rates.

THE HASSLE FACTOR: A few health plans, most notably
UnitedHealth Group, have promised to reduce pre-
authorizations and other administrative requirements. But
so far, these isolated cases haven't translated into a
stampede of health plans eliminating bureaucratic hassles.
The Coalition for Affordable Quality Healthcare, a group
of health plans and trade groups, has promised to improve
communications between physicians and health plans,
streamline the credentialing process, improve payment
mechanisms and make other changes. But providers have
dismissed the group's pledges as election-year politics
with little substance behind it. by Jill Brown on September 25, 2000
Question 4 - In payor relations its very much seen by physicians as an us vs. them mentality. How do you get beyond this to forge a collaborative relationship? by HBInterview on September 26, 2000

Answer 4 - The media (and this forum) have been dominated by reports of fractious relationships between providers and payers. But while economic forces dictate that providers and plans are on opposite sides, with physicians trying to increase reimbursement while health plans are working to lower it, it is possible for the two to develop more collaborative relationships.

Following are a few critical success factors health plans
recommend to improve physician relationships:
1. Keep physicians in the loop. Health plans frequently
introduce new programs and changes to existing policies
to comply with regulations or improve business processes.
If health plans include physicians in the development phase, seeking feedback on new initiatives in the works, they stands a better chance of being welcomed. The plan will also get an early warning system alerting them to any
potential problems with physicians.
2. Listen to physicians' concerns and respond to them.
Many provider relations problems can be headed off early
by meeting with physicians to hear concerns. But the plan
can't just listen and leave -- it must respond to
acknowledge that issues have been heard.
3. Back up policies with data. Physicians respond to
scientifically-based information. For example, to build
support for its physician report cards, Woodland Hill,
Calif.-based Health Net gets the results published in
national and regional peer-reviewed medical journals. by Jill Brown on September 26, 2000
Question 5 - Physician groups have become more aggressive in using legal methods to resolve disputes. What has prompted that trend, and what impact does it have
on provider/payor relationships? by HBInterview on September 26, 2000

Answer 5 - Local, state and national medical groups are increasingly turning to lawsuits to resolve disputes with managed care firms. The charge has been led by the American Medical Assn.'s AMA/State Medical Society Litigation Center, which has over 20 cases currently pending in federal and state courts dealing with reimbursement, coverage and other issues.

In some cases, litigation has highlighted providers'
concerns and increased their clout. For example, a long-
standing payment dispute simmering between California
providers and managed care companies blossomed into AB
1455, a managed care payment bill supported by the payer
and provider communities. (It's now sitting on Gov. Gray
Davis' desk.) The bill got a push from lawsuits filed by
the California Medical Assn. and Catholic Healthcare West,
alleging that managed care plans' reimbursement policies
were unlawful and fraudulent business practices.

And last spring, the Georgia Medical Assn. sued Aetna
Inc., UnitedHealthcare, Inc. and other health plans over
late payments to providers. The suits follow the lead of
Georgia Insurance Commissioner John Oxendine, who has
fined a number of health plans over the past year over late payments to providers, based on quarterly audits of
insurance company data.

Still, litigation should be used as a last resort, once
providers have tried every other solution and are ready
to throw down the gloves. It is not only expensive and
time-consuming, but rarely delivers an immediate solution
to providers' problems. by Jill Brown on September 26, 2000
Question 6 - You mention ecommerce in answer #2. Could you elaborate on the ecommerce strategies? What e-strategies seem to be surfacing in this industry? by HBInterview on September 26, 2000

Answer 6 - Payors are developing a range of e-commerce offerings designed to reduce administrative hassles for providers. Among the more common services available:
Member eligibility and benefits checks. Medical groups and other providers can log onto a secure server to confirm that a patient is a current health plan member and ensure that benefits are covered. By entering one member's ID number, office staff can view a list of the insured and all dependents, the assigned primary care physician for each, effective dates of coverage and other information. Ideally, the database is updated in real time, ensuring that information is as current as it would be if medical office staff called the plan.
Referral and authorization submissions. Providers can't
submit requests for authorization, send in referrals or
confirm that a referral was processed.
Claims submission and status check. Provider groups can
send in claims electronically, then track the claim through the system to find out whether it's been paid, is being adjudicated, or has been sent back for more information.
Prescription benefit services. Many plans now offer
formulary look-up services for physicians to confirm whether a medication is covered by the plan. Now, some pharmacy benefit managers are also starting to offer online prescribing services using hand-held devices. by Jill Brown on September 26, 2000
Question 7 - How do e-health initiatives like (online referral requests or claims submission) affect payor/physician relationships? by HBInterview on September 27, 2000

Answer 7 It's been well-publicized that health plans can save anywhere between $4 and $7 in administrative expenses for each transaction they can automate on the Internet.

But implementing the e-health initiatives required to reap
those savings can be a great frustration to providers, if
they feel they're being asked to implement and
operationalize new systems without seeing any of the

The major hurdle to health plans seeking those savings is
getting physicians on board and online so they start moving their interaction from call center-reliant to Internet-reliant. To do that, health plans have to make sure the new technology benefits providers as much as it benefits the plan. Providers are going to be unwilling to change administrative procedures if the new system requires investing in new equipment and training staff without gaining anything like faster reimbursement or lower overhead.

But, on the other hand, if providers find that the system
has been designed with them in mind, and allows them to
streamline their operations as well, provider relations will improve as a result. It's all a question of aligning
incentives. by Jill Brown on September 27, 2000
Question 8 - What is the best way to implement e-health initiatives that affect providers? by HBInterview on September 27, 2000

Answer 8 - The best way to implement anything that affects providers and health plans' relationships with providers is to:
1. Get input.
2. Use it.

And e-commerce is no different. Health plans should get
input from providers who will be using the system to find
out what will make them most likely to embrace the new
system, then incorporate those suggestions as much as

I mentioned Foundation's Connecticut subsidiary in an
earlier answer. They followed a careful process of
selecting a medical group to pilot a new e-commerce system, developing the system based on their input, then refining it using the group's suggestions and feedback. by Jill Brown on September 27, 2000
Question 9 - In regards to technology, how do you see this relationship in the future? What might that look like? Are there payer/provider networks who are already using advanced technologies and ahead of the industry? by HBInterview on September 27, 2000

Answer 9 - I think HIPAA implementation and compliance will drive payer and provider technology advances over the next few years. The 1996 Health Insurance Portability and Accountability Act dictates how information is shared, how transactions are conducted and how plans, providers and other health care organizations' operations handle data.

But HIPAA calls for enormous investment, not just in
information technology applications and infrastructure,
but in operationalizing the changes called for across the
organization. Some experts estimate that just implementing
the administrative simplification portion of the law will
cost three to four times that spent on Y2K efforts.

Given the size of the investment, forward-thinking health
plans and providers have begun working together to be sure
that the changes they're implementing make sense. One
example is Foundation Health Systems, Inc. The managed
care giant started with its Connecticut subsidiary PHS
Health Plans, and worked with one 50-physician medical
group, to design a pilot program for developing a variety
of e-commerce applications like electronic claims submission, authorization requests and other transactions.

Foundation used the medical group's input to develop and
refine the program. Now, it's being implemented across
Connecticut and may likely be replicated in other
divisions nationwide.

Other payers who are out in front include Humana Inc.,
which is leveraging its relationship with WebMD to fulfill
the goal of becoming the most technologically advanced health plan, and WellPoint Health Networks, Inc., which has made large investments in Web-enabling its broker applications to help sell plans online. by Jill Brown on September 27, 2000
Question 10 - As a provider rep you end up working with physicians staff as much or more than the physician themselves. Would you discuss the role of office staff in the payer/provider relationship? by HBInterview on September 28, 2000

Answer 10 - Office staff are often the first line of defense with an insurance company. Although the payor contracts with the physician, frequently the office's structure, staffing and management can have a huge impact on the payor/physician relationship.

An obvious example is eligibility checks. Typically,
medical groups confirm that a patient is eligible for
benefits each time he or she comes to the medical office.
That process falls entirely to the office staff, and
physician typically hears about is only if it's
particularly convenient or infuriating. Since office staff
have the provider's ear, they'll make sure it's clear that
one insurance company is unusually easy or difficult to
work with. And in any office, unhappy workers affect the
boss' productivity. by Jill Brown on September 28, 2000
Question 11 - We are beginning to hear that managed care is on the way out, healthcare costs are still rising, it's served its purpose. What are your thoughts? Will it work they way it is now or Will it have to reinvent itself? Is managed care on the way out? by HBInterview on September 28, 2000

Answer 11 - Managed care has been under a great deal of criticism lately because of the financial incentives, treatment constraints and other mechanisms it uses to contain costs. But simply put, as long as health care costs continue to increase - and they will - these mechanisms will continue to be necessary.

HMOs have been demonized in the media and election-year
rhetoric. But meanwhile, PPOs, POS and indemnity plans
have adopted many of the managed care techniques that kept
HMO rates low. The benefit packages may have tighter or
looser restrictions, may go by different names and use
varied payment systems for providers, but the basic tools
are likely here to stay.

The open question is, how can we find mechanisms that
ensure that quality remains high while unnecessary
utilization stays low? One trend we're starting to see
more of is plans offering benefit packages with fewer
restrictions, lower premiums and higher cost-sharing.
Moving the decision-making power - and the financial
responsibility that comes with that power - back into
consumers' hands may incentivize patients to control
costs themselves. by Jill Brown on September 28, 2000
Question 12 - Quality and low costs have always been a tug of war, do you see payer organizations including consumers in their processes to improve their services to consumers? by HBInterview on September 29, 2000

Answer 12 - In the past year, a number of payers have developed products that would make consumers much more involved in health decisions. In the same way payers incentivized providers to limit services, these products increase the amount of cost-sharing by consumers. One example is Oxford Health Plans' new "Freedom Plans" that include higher deductibles, more out-of-pocket costs and lower premiums. Consumers theoretically have more control over the quality and type of care they receive because there are fewer restrictions on benefits. But at the same time, there is a clear relationship drawn between value and cost. by Jill Brown on September 29, 2000
Question 13 - The emphasis has been on the payer/provider relationship. Do you see the consumer as being an important third element to this relationship? by HBInterview on September 29, 2000

Answer 13 - Absolutely. Both the payer and provider are working to care for enrollees, and secondarily to attract consumers to sign up for services with the plan or physician.

One key that binds these groups together is the quality of
health services provided. It is in the best interest of all
three groups to provide as make sure health care is as high
quality as possible. The theory goes that if providers and
payers can work together to improve performance and outcomes data -- in tandem with employers, ideally -- consumers will begin to recognize the value of those services and be more willing to pay for them.

The difficulty is communicating that value to consumers. A
number of studies (most recently Kaiser Family Foundation's
fall 2000 study of employers, available at
indicates that only 10% to 15% of firms are aware of
NCQA accreditation and HEDIS data. But there are some
excellent examples of collaboration out there, notably the
Pacific Business Group on Health. It releases annual report
cards of providers and plans that allow consumers to assess
quality, ideally fueling demand for more high-quality services and rewarding those health firms that are doing well. by Jill Brown on September 29, 2000

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